Question
Groves Company Inc. had a beginning inventory of 100 units of Product MLN at a cost of $8 per unit. During the year, purchases were:
Groves Company Inc. had a beginning inventory of 100 units of Product MLN at a cost of $8 per unit. During the year, purchases were:
Feb. 20 600 units at $9
Aug. 12 400 units at $11
May 5 500 units at $10
Dec. 8 100 units at $12
Groves Company uses a periodic inventory system. Sales totaled 1,500 units.
Instructions:
(a) determine the cost of goods available for sale.
(b) Determine the ending inventory and the cost of goods sold under each of the assumed cost flow methods (FIFO, LIFO, and average-cost). Prove the accuracy of the cost of goods sold under the FIFO and LIFO methods. (Round average unit cost to three decimal places.)
(c) Which cost flow method results in the lowest inventory amount for the balance sheet? The lowest cost of goods sold for the income statement?
| Instructions: | ||||||||||||||||||||
| (a) Determine the cost of goods available for sale. | ||||||||||||||||||||
| COST OF GOODS AVAILABLE FOR SALE | ||||||||||||||||||||
| Date | Explanation | Units | Unit Cost | Total Cost | ||||||||||||||||
| Date | Text | Quantity | Amount | Formula | ||||||||||||||||
| Date | Text | Quantity | Amount | Formula | ||||||||||||||||
| Date | Text | Quantity | Amount | Formula | ||||||||||||||||
| Date | Text | Quantity | Amount | Formula | ||||||||||||||||
| Date | Text | Quantity | Amount | Formula | ||||||||||||||||
| Total | Formula | Formula | ||||||||||||||||||
| (b) Determine the ending inventory and the cost of goods sold under each of the assumed cost flow methods (FIFO, LIFO, and average cost). Prove the accuracy of the cost of goods sold under the FIFO and LIFO methods. (Round average unit cost to three decimal places.) | ||||||||||||||||||||
| (b)(1) FIFO | (b)(2) FIFO | |||||||||||||||||||
| Ending Inventory | Cost of Goods Sold | |||||||||||||||||||
| Date | Units | Unit Cost | Total Cost | Cost of goods available for sale | Amount | |||||||||||||||
| Date | Quantity | Amount | Formula | Title | Amount | |||||||||||||||
| Date | Quantity | Amount | Formula | Title | Formula | |||||||||||||||
| Formula | Formula | |||||||||||||||||||
| Proof of Cost of Goods Sold | ||||||||||||||||||||
| Date | Units | Unit Cost | Total Cost | |||||||||||||||||
| Date | Quantity | Amount | Formula | |||||||||||||||||
| Date | Quantity | Amount | Formula | |||||||||||||||||
| Date | Quantity | Amount | Formula | |||||||||||||||||
| #REF! | Quantity | Amount | Formula | |||||||||||||||||
| Formula | Formula | |||||||||||||||||||
| (b) (1) LIFO | (b) (2) LIFO | |||||||||||||||||||
| Ending Inventory | Cost of Goods Sold | |||||||||||||||||||
| Date | Units | Unit Cost | Total Cost | Cost of goods available for sale | Amount | |||||||||||||||
| Date | Quantity | Amount | Formula | Title | Amount | |||||||||||||||
| Date | Quantity | Amount | Formula | Title | Formula | |||||||||||||||
| Formula | Formula | |||||||||||||||||||
| Proof of Cost of Goods Sold | ||||||||||||||||||||
| Date | Units | Unit Cost | Total Cost | |||||||||||||||||
| Date | Quantity | Amount | Formula | |||||||||||||||||
| Date | Quantity | Amount | Formula | |||||||||||||||||
| Date | Quantity | Amount | Formula | |||||||||||||||||
| Date | Quantity | Amount | Formula | |||||||||||||||||
| Formula | Formula | |||||||||||||||||||
| (b)(1) Average Cost | (b)(2) Average Cost | |||||||||||||||||||
| Ending Inventory | Cost of Goods Sold | |||||||||||||||||||
| Inventory cost = | Amount | Cost of goods available for sale | Amount | |||||||||||||||||
| Total units = | Quantity | Title | Amount | |||||||||||||||||
| Title | Formula | Title | Formula | |||||||||||||||||
| Ending inventory units = | Quantity | |||||||||||||||||||
| Title | Amount | |||||||||||||||||||
| Title | Formula | |||||||||||||||||||
| (c) Which cost flow method results in the lowest inventory amount for the balance sheet? The lowest cost of goods sold for the income statement? | ||||||||||||||||||||
| Enter text answer here. | ||||||||||||||||||||
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Financial Management For Decision Makers
Authors: Peter Atrill
9th Edition
1292311436, 978-1292311432
